lull
Pol
Penn State
Poultry
Pointers
LAYER MANURE: A
VALUABLE PRODUCT
Eric S. Loren/., M.S.
Ag Economics Candidate
Research Assistant
Dept. Of
Poultry Science
In the preceding 20 years, there
has been a worldwide awakening
to the problem of pollution of the
environment (air, water, soil) and
ns effects on human health and
other forms of life.
Much of this concern has
stemmed from the amount of man
ure produced by the increased
number of animals in confinement.
This is certainly true in the poul
try industry. The trend is away
from small flocks and toward the
concentration of poultry into
houses containing more than
100,000 laying hens.
The economy of size has
enabled producers to take advan
tage of labor-saving devices for
(ceding and watering, technologi
cal innovations for egg collection
and processing, discounts asso
ciated with bulk feed purchases,
and other production cost-saving
pracuces.
However, one limitation is the
utilization of manure from this
large concentration of birds.
The public and environmental
ists have voiced the following
major concerns pertaining to pol
lution associated with farm ani
mals excreta:
• Nitrates natural processes
break down manure and allow
nitrates to disperse into surface and
ground water.
• Inorganic elements exces
sive application of manure to crop
land tends to accumulate these ele
ments (P, K, Ca, etc.) in the soil
that can be toxic to plants and
detrimental to soil structure.
• Oxygen demand organic
material (runoff) has a high oxy
gen demand that will decrease
obtainable oxygen to fish and other
aquatic life.
•Odors, dust and insects
farms located near centers of popu
lauon arc having a growing num
ber of complaints Tiled against
them because of these nuisances.
Economic Viewpoint
Economists classify these pol
lutants as externalities (an effect of
one economic agent on another
>hat is not taken into account by
normal market behavior). In
simple terms, the excess applica
tion of manure to land by farmers
imposes a cost (the cleanup) on
society.
Today, this cost is not normally
determined as a production cost to
•to poultry producer. Thus, the
mput (pollution) is considered a
toe factor of production and thus
lls use is maximized. Therefore,
•he benefits accrue to the firm
w hilc the cost is passed to society.
One traditional solution to an
externality is a governmental tax
0,1 the good generating the prob
lem. This is illustrated conceptual
ly in Figure 1.
j
Demand
TjuT"\
Revenue
The normal workings of the
market will cause output “Y” to be
produced. Taxing of the good
(eggs) will reduce the demand
curve facing the firm from
“Demand” to “Demand’ 4 *. This
will shift the profit-maximizing
level of egg output from “Y” to
“Y”’, which is also the level of out
put that is socially optimal.
By taxing eggs, the effective
demand for the product has been
reduced; individuals who use eggs
are now forced to pay for the dam
age that egg production creates.
Two concerns with this solution
are, first, calculating the precise
tax to be imposed directly on the
good. Second, the price elasticity
of demand for eggs is -.23, which
is inelastic (the quantity demanded
changes relatively little compared
to the change in price). Combined,
these two factors make it difficult
to obtain the exact desired effect of
pollution abatement.
An alternative course is to inter
nalize the externality. Instead of
the cost of pollution cleanup being
passed to society, the cost is inter
nalized as a production cost to the
egg producer. This will increase
the price of the input manure dis
posal. The change in the input
price will cause a shift in the firm's
cost curves. In effect, the firm will
now pay the full social marginal
cost (“MC social’’) of egg produc
tion. In other words, the Him man
ger will now lake the marginal cost
curve for production to be MC
social and would produce where
marginal revenue (“Demand”) =
MC social, which is required for
efficiency.
Solutions
There are numerous exotic tech
niques to utilize layer manure
(ensiling for ruminant feed, incin
eration and methane digestion for
electricity generation), although
more realistic approaches to
minimize the cost of manure utili
zation arc:
1. Application to agriculture
land as fertilizer at site of
production
2. Export as fertilizer to agricul
tural land in neighboring areas.
Option 1: Application to agri
cultural land as fertilizer.
Most layer operations remove
the manure regularly as a matter of
animal health. After they move out
a flock of hens, they clean the layer
house. Other producers will
remove the manure several times
during the laying cycle. In either
case, this results in an enormous
pile of manure (around 1,600 tons
of “as-is” manure/100,000 hens/
year).
Most operations have solved the
problem of disposal by spreading
the manure on available land. As
mentioned previously, excess
manure applications can cause
numerous pollution problems. In
addition, because of the potential
for environmental damage, some
slates limit the rate of manure
application per acre of land.
For example, Pennsylvania
House Bill Number 100 states that
“concentrated animal operations’’
Figure 1
t ▼
will be required to develop and
maintain a nutrient management
plan. Concentrated animal opera
tions have an animal density of two
or more animal units per acre on an
annual basis. An animal unit is
1,000 pounds of live weight. The
table below illustrates the outcome
of this law on an average size flock
of 100,000 hens.
AEU = Animal Equivalent Units
3.28 lb. mean weight x 100,000
per acre = 164 acres required.
Manure and nutrient production from such a size flock would be:
AS IS* LBS/ACRE (WITH 164 ACRES)
Manure 3,200,000 lbs (1600 tons)
total N 57,600 lb.
P 205 89,600 lb.
K2O 51,200 lb.
* Based on 77 samples.
♦♦This is above agronomist’s recommendations of 7 tons/acre.
♦♦♦These nutrient concentrations exceed values required for most crops.
For Example:
ISO bushel com silage requires
N = 200 Ib/acre
Thus a location 50 miles from
the source will cost:
soxl7 tons = $O.OO
SO.SO/ton to load 17 tons = $8.50
$1.30 x 100 miles = $130.00
Total Cost = $138.50/truck
load or $8.15/ton
Therefore, the pollution dilem
ma still exists under these guide
lines with this manure nutrient
analysis. This suggests there is not
only a manure quantity problem
but also a quality consideration
(nutrient concentration).
An additional issue is that the
average farm with 100,000 layers
may only have an average of 50
acres of tillable land. Therefore.
Thus, a location 50 miles from miles = $130.00 lOCTotal Cost = manure as a fertilizer, must be
the source will cost: 10CS0 xl7 $138.50/truck load or 58.15/lon determmed. This is approximated
tons = 50.00 10C$0.S0/ton to load For correct analysis, a value, for b y us,n 8 commercial bulk fcrtiliz
-17 tons = $8.50 9C51.30 x 100 the nutrient characteristics of layer er Pnccs
MC social
S Cost
MC firm
Output o f Good
50 75 100 125 150 175 200
Miles from source
$O/ton purchase price of manure 17 tons/loadso.so/ton
for producer to load truck $1.30/mile round trip.
Lancaster Farming, Saturday, Juna 11,19M-C9
another site must be located for
disposal of poultry manure. If SO
acres are available and 164 acres
arc required, then an additional
114 acres must be obtained.
Hence, the producer must decide
whether to buy or rent land, sell the
excess manure, or reduce
production.
For simplicity sake, we will
assume the most cost effective way
is to sell the excess manure to
Mother area (option 2).
Option 2: Export as fertilizer to
agricultural land in neighboring
areas.
Because of the bulkiness and the
potentially high level of moisture
(60 percent) of layer manure, the
major cost for the buyer is trans
portation. However, there are cus
tom applicators who will pick up,
transport, and apply the manure.
These custom applicators have
spreader-type trucks that can haul
and apply approximately 17 tons
“as is” of layer manure per load. As
one can surmise, as distance from
the source increases, the total cost
to the buyer increases (Figure 2).
Nutrient
P 205
K2O
Total manure per 100,000 hens
328,000 lb. live at 2 AEU
19,512 (9.8
546^
For example, if the trucking Dis
tance is 50 miles, then the trucking
cost is $8.15/ton and the value
from the fertilizer is $25.46, result
ing in a gain of $17.31/ton.
At distances greater than 163
miles, the trucking cost eliminates
the benefits of using poultry man
ure fertilizer. Therefore, as shown
by Figure 3, exporting manure for
distances of 163 miles or less is
profitable.
On the surface, exporting man
ure is an economically feasible sol
ution with benefits to all (produc
er, applicator, buyer, society).
Nevertheless, there are other con
cerns. For instance, is there a
market for poultry manure? Are
Figure 2
sufficient commercial applicators
available? Also, what is the effect
on the commercial fertilizer mark
et? And, finally, would the
increase m demand for custom
applicationof poultry manure have
a detrimental effect on the com
mercial fertilizer industry?
Nutrient management legisla
tion has decreed that the benefits to
society arc greater than the cost
imposed on firms for pollution
control. The imposed cost is now
incorporated as part of the firm’s
production function. The dual
approach to cost minimization is
for the firm to maximize output for
a given expenditure of total cost.
One means to cost minimization
is for efficient use of the resource.
Layer manure, previously thought
of as a “waste,” must now be con
sidered a resource. Taken one step
farther, it can also be classified as a
by-product that can have signific
ant economic value as a plant
nutrient.
“AS IS” 60.4% MOISTURE
price/ton
%
1.8
2.8
1.6
iWton cents dollars
36 22.5 8.10
56 23.0 12.88
32 14.0 4.48
Value $25.46/ton
1600.00 ton annual x 25.46 value
Only two possible solutions
have bam addressed to the manure
utilization issue. There are others
as mentioned previously. One
intriguing approach is, instead of
treating the effect, why not exa
mine the cause of the externality?
Is it possible to modify the genetics
of the bird to increase nutrient
absorption? Can the nutrient
makeup of the diet be altered to
decrease the amount of nutrients in
the feces? More research is needed
to study other feasible and eco
nomical answers.
Trucking cost =
scost/ton (table 1 x 17 ton/load.
Value “as b” =
$25.46/ton x 17 ton/load = $432.82.
Based on the current trucking
cost and estimate of manure fertil
izer value, it can be concluded that
163 miles is the maximum range
for custom application (Figure 3).
Summary
(Turn to Page C 11)